Audit required in 1st year of plan?

[John A]

If there are 100 or more participants on the 1st day of a brand new plan, is an audit required, or is there any exception for the 1st year of a plan?

[rcline46]

Exception only if first year is under 7 months, then second year audit must include BOTH years.

[Guest James Osterhaus]

RCLINE 46

I thought there was an exception for the first year reguardless of the length of the plan year. Could you tell me where I can go to find documentation.

Thanks

James

[Guest Emiliano]

Can one prove a negative? The short-year deferral rule is found in federal regulations 29 CFR 2520.104-50. The requirements for attaching an opinion of an IQPA are found in federal regulations 29 CFR 2520.103-1(B) and ERISA section 103(a)(3)(A).

[rcline46]

The regs provide for an audit of ALL plans regardless of size! Then there are exceptions in the regs for 'small' plans (under 100 lives) or for short years.

The IRS created another exception by saying a 'short' 5500 (old C or new forms) for plans under 120 participants by allowing the previous year form to be filed, which does not provide for attaching an audit.

The regs are available on benefitslink.com under the Department of Labor.

[Guest James Osterhaus]

Thanks for your help.